College Student Caught in Counterfeit Coupon Scheme

For nearly a year, 22 year-old Lucas Henderson of Texas has been creating and distributing fake coupons, resulting in hundreds of thousands of dollars lost by retailers and manufacturers. He surrendered in federal court last week.

How did Henderson do it? Since July 2010, he allegedly created fraudulent coupons designed to look like online print-at-home coupons available to consumers at SmartSource.com. These coupons, which ranged from lower-priced consumer items such as energy drinks, beer and cigarettes, to more expensive consumer products such as X-Box and PlayStation, all made unauthorized use of the “Powered by SmartSource” logo, as well as a distinctive border, both of which are registered trademarks. He then distributed his coupons by anonymously posting on two message boards devoted to the discussion of online coupons. Henderson also wrote tutorials, which he posted online, providing instructions to others for creating counterfeit coupons using their own computers.

His actions have resulted in substantial losses not only to the manufacturers of various affected products but also to retailers and consumers themselves. In December 2010, for example, $200,000 worth of counterfeit coupons for Tide laundry detergent were redeemed by consumers over a two to three week period. Proctor & Gamble, which manufactures Tide and is the single largest coupon issuer in the United States, has never issued a single online print-at-home coupon. The costs associated with the redemption of those counterfeit coupons were subsequently borne by Proctor & Gamble and the various retailers victimized by the fraud.

Henderson is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of trafficking in counterfeit goods, which carries a maximum sentence of 10 years in prison. The FBI says the investigation is continuing.

Related Reading:

• Man Pleads Guilty to Hacking Neighbor’s Wireless, Sending Threats against Vice President

• Mobile & Smart Device Security Survey 2010 – Concern Grows as Vulnerable Devices Proliferate

• Former Goldman Sachs Programmer Found Guilty After Stealing Computer Code

• Mobile & Smart Device Security Survey 2010 – Concern Grows as Vulnerable Devices Proliferate 

• Chinese National Pleads Guilty to Stealing Ford Trade Secrets

• Akamai Employee Arrested, Accused of Trying to Sell Information to Foreign Government